Weekly Topic Update (Feb 4 to Feb 10)

Fed's historic penalties on Wells Fargo emphasize consequences of risk management oversights


Wells Fargo was imposed a limit on loan writing - which may cost it $400 million this year - and other growth restrictions as part of the Fed's sanctions against the bank for failing to catch 3.5 million fake accounts. The Fed has never before placed a firmwide limit on a bank. However, the financial impact may be less than 2% of its total 2017 earnings of $22 billion, and if it successfully passes a review in September, it's possible that stock declines could be the end of the firm's financial worries. The challenge for the bank will be to endure the penalties while its rivals are freer to lend and grow than they have been for years.
The sanctions against Wells Fargo are so unusual, no one knows what to think

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Source: CNBC

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Big banks continue to ban credit card purchases of bitcoin

Bloomberg • Lending

JPMorgan, Bank of America and Citigroup will no longer allow purchases of Bitcoin and other cryptocurrencies on their credit cards due to the risk they carry. BofA’s policy applies to all personal and business credit cards, though it doesn’t affect debit cards. Cryptocurrencies’ purchases can create big headaches for lenders, as they’ll be on the hook if a borrower can’t repay. There’s also the risk that thieves will abuse cards that were stolen or are based on stolen identities.

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Trump team push to dismantle CFPB continues despite federal ruling

CNBC • Lending

The Trump administration’s effort to reduce regulation is still moving forward despite a federal ruling that dealt a blow to lawmakers who hope to dismantle the independence of the CFPB. Acting director Mick Mulvaney’s recent moves within the agency already point to a body that's kinder to businesses. Consumer advocacy groups have decried Mulvaney in this role on the grounds that he also serves as Trump's budget director in the White House and was critical of the CFPB in the past.

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Report: U.S. among top enablers of money laundering

MoneyLaundering.com (sub. req.) • AML BSA CTF

The U.S., Switzerland and the Cayman Islands were found to be the greatest facilitators of money laundering, while Vanuatu, the Bahamas and Antigua & Barbuda were the most secretive financial jurisdictions, a research report uncovered.

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